BANKS
TO CUT BACK CREDIT CARDS
BY TRILLIONS, DESPITE GETTING
TRILLIONS FROM US TAX PAYERS'

THIS IS HOW TO TURN A RECESSION
INTO A DEPRESSION!

TigerSoft Charts Here: MA,
BAC, C and JPMWilliam Schmidt, - Tiger
Software's Creator
(C) 2007 William Schmidt, Ph. D. - All Rights
Reserved. No reproductions of this blog or
quoting from it
without explicit written consent by its author is
permitted.

The degree to which the Bush Administration dangerously gave the biggest banks whatever
they asked
for is a story still to be told. More and more is coming out. Bush's
people ignored dire warnings about the
housing bubble and its dangers. They consistently let their banking buddies
recklessly make more money
when prudence should have stopped them. In 2005 and 2006, "The Bush administration backed off proposed
crackdowns on no-money-down, interest-only mortgages years before the economy collapsed,
buckling to
pressure from some of the same banks that have now failed. It ignored remarkably prescient
warnings
that foretold the financial meltdown, according to an Associated Press review of
regulatory documents."
(Source: http://news.yahoo.com/s/ap/20081201/ap_o...
)

THROWING ROCKET FUEL ON THE FIRE

Republican Congressment and the White House shielded banks by not establishing legal
liability
for failed mortgages that they were selling. That "fueled
these firms' avarice, While Wall Street financiers
stoked today's financial meltdown with explosive investing in high-risk mortgage loans,
politicians,
federal officials and lobbyists shielded them from lawsuits that would have protected
borrowers and
tempered the frenzy. A principle known as assignee liability would have allowed borrowers
to sue
anyone holding paper on their loan, from the originators who sold it to them to the Wall
Street
investment bankers who ultimately funded it. Without the measure in place, Wall
Street increased
by eightfold its financing of subprime and nontraditional loans between 2001 and 2006,
including
mortgages in which borrowers with no proof of income, jobs or assets were encouraged by
brokers to
take out loans, according to statistics provided by mortgage trackers. The Bush
administration and
members of Congress -- including a key Republican subcommittee chairman who was later sent
to
prison for political corruption -- sided with lending-industry lobbyists and free
marketers who hotly
and successfully opposed blanket liability for Wall Street firms selling mortgage-backed
securities,
according to congressional testimony, other records and interviews."
(Eric Nalder - http://seattlepi.nwsource.com/business/3...
)

"When history tells the story of the
subprime lending crisis and recounts its devastating effects on the lives of so many
innocent homeowners, the Bush administration will not be judged favorably. The tale
is still unfolding, but when the dust settles, it will be judged as a willing
accomplice to the lenders who went to any lengths in their quest for profits. So
willing, in fact, that it used the power of the federal government in an
unprecedented assault on state legislatures, as well as on state attorneys general
and anyone else on the side of consumers."

Several years ago, state attorneys general and others involved in consumer protection
began to notice a marked increase in a range of predatory lending practices by mortgage
lenders. Some were misrepresenting the terms of loans, making loans without regard to
consumers' ability to repay, making loans with deceptive "teaser" rates that
later ballooned astronomically, packing loans with undisclosed charges and fees, or even
paying illegal kickbacks. These and other practices, we noticed, were having a devastating
effect on home buyers. In addition, the widespread nature of these practices, if left
unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush
administration looked the other way and did nothing to protect American homeowners. In
fact, the government chose instead to align itself with the banks that were victimizing
consumers.

Predatory
lending was widely understood to present a looming national crisis. This
threat was so clear that as New
York attorney general, I joined with colleagues in the other 49 states in attempting
to fill the void left by the federal government. Individually,
and together, state attorneys general of both parties brought litigation or entered into
settlements with many subprime lenders that were engaged in predatory lending practices.
Several state legislatures, including New York's, enacted laws aimed at curbing such
practices.

What did the Bush administration
do in response? Did it reverse course and decide to take action to halt
this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands
of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do
nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to
prevent states from protecting their residents from the very problems to which the federal
government was turning a blind eye.

Let me explain: The administration accomplished this feat through an
obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence
since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For
140 years, the OCC examined the books of national banks to make sure they were balanced,
an important but uncontroversial function. But a few years ago, for the first time in its
history, the OCC was used as a tool against consumers.

In 2003, during the height of
the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to
issue formal opinions preempting all state predatory lending laws, thereby rendering them
inoperative. The OCC also promulgated new rules that prevented states from
enforcing any of their own consumer protection laws against national banks. The federal
government's actions were so egregious and so unprecedented that all 50 state attorneys
general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of
the 50 states did not deter, or even slow, the Bush administration in its goal of
protecting the banks. In fact, when my office opened an investigation of possible
discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit
to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the
banks and their defenders was that efforts to curb predatory lending would deny access to
credit to the very consumers the states were trying to protect. But the curbs we sought on
predatory and unfair lending would have in no way jeopardized access to the legitimate
credit market for appropriately priced loans. Instead, they would have stopped the scourge
of predatory lending practices that have resulted in countless thousands of consumers
losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and
recounts its devastating effects on the lives of so many innocent homeowners, the Bush
administration will not be judged favorably. The tale is still unfolding, but when the
dust settles, it will be judged as a willing accomplice to the lenders who went to any
lengths in their quest for profits. So willing, in fact, that it used the power of the
federal government in an unprecedented assault on state legislatures, as well as on state
attorneys general and anyone else on the side of consumers.

PAULSON AND BERNANKE HAVE NOTHING TO SHOW
FOR THE TRILLIONS THAT THEY HAVE GIVEN BANKS.

Treasury Secretary Paulson and
Federal Reserve Chairman have been giving away trillions
of dollars in taxpayer money to banks without any strings requiring them to make loans,
and, in the
case of the Federal Reserve, ZERO public accountability. Surely, they knew what they
were doing. This isTHE BIGGEST THEFT of PUBLIC MONEY
IN ALL HISTORY.The banks are
now saying that they are not only not bound to increase regular loans, but that they are
also going to
cut back credit card loans by trillions over the next 18 months. This will devastate
the American
economy. How are people supposed to buy things or make normal business
transactions?

"The U.S. credit-card industry may pull
back well over $2 trillion of lines over the next
18
months due to risk aversion and regulatory changes, leading to sharp declines in consumer
spending, prominent banking analyst Meredith Whitney said. The credit card is the
second key
source of consumer liquidity, the first being jobs, the Oppenheimer analyst noted.
"In other words,
we expect available consumer liquidity in the form or credit-card lines to decline by 45
percent."
(
Source: http://www.cnbc.com/id/27993643 )

Three banks, that's right, just three banks control more than half the credit card credit
in the US! Bank of America (BAC) (12.85 -3.40), Citigroup*6.45
-1.84) and JPMorgan-Chase
(26.12 -5.54), in effect, control the destiny of the US economy. These banks
have way too
much power. They hve a stranglehold over all Americans. Surely, they must be
broken up!
I have to ask just what is the public function of these monster banks? The money
should be
taken back and they should be denied their charters. If they won't make loans and
no one
else will, the Federal Government should set up its own national bank, at least for the
duration
of this Recession-Depression, to make these loans!

Make no mistake about it, if the banks take $2 trillion from the $13.8 trillion US economy,
we will have another Depression. The multiplied effect will work
its deadly magic. Millions
will be laid off. Their consumption will drop sharply. That will cause more
lay-offs and so on.Credit card companies are already reducing their lines of credit
and canceling credit
cards that are not used. Discretionary spending is dropping sharply.
Many well-known
retail stores have filed for bankruptcy protection:

Circuit City (bankruptcy protection)
Sharper Image (bankruptcy protection)
Ann Taylor - 117 stores nationwide are to be shuttered
Lane Bryant, Fashion Bug,and Catherines to close 150 stores nationwide
Eddie Bauer to close stores 27 stores and more after January
Cache will close all stores
Talbots closing down all stores
J. Jill closing all stores
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January.
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January
Home Depot closing 15 stores 1 in NJ (New Brunswick)
Macys to close 9 stores after January
Linens and Things closing all stores
Movie Galley Closing all stores
Pacific Sunware closing stores
Pep Boys Closing 33 stores
Sprint / Nextel closing 133 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores
Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Loews to close down some stores
Dillards to close some stores
(Source: http://1stnews.org/249/ann-taylor-store-closings/
_

If credit is not extended consumers, things will get even worse. Prices will spiral
down.
This is very deflationary. The deflationary spiral will be quickened
dramatically. Cash will be
king!This will be awful! Perhaps,
unprecedented. They Credit Cards is the second source of
consumer buying power and
liquidity, after pay checks. In effect, consumer will have 45% less
buying power. The
economy will suffer even more because of the muliplier effect.

MA (Master Card) remains in a steep declinesince peaking in May when the DJIA did.
It
is now down 50%. We watch the declining (blue) Closing Power especially closely.
That
will need to break its downtrend to start to show confidence and normal credit
conditions
are returning. The purple OBV Line is downtrending, showing aggressive selling
continues.
The Accumulation Index has been (red) negative for two months. There
are
no bullish signs here and the stock is on a Red Sell.

BANKS HAVE GOTTEN $7.36 TRILLION
FROM TAXPAYERS.

This is more than was spent on WWII. It is astronomical. It is
the equivalent of all
the goods and services produced in one year by the US. This fantastic sum is a
"complicated
cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market
mechanisms by the Federal Reserve, the Treasury and other offices of government taken
over roughly the last year. The bulk of the sum falls under the Federal Reserve's
umbrella,
while another good chunk ($700 billion) is the under the Troubled Asset Relief Program
(TARP) as defined under the Emergency Economic Stabilization Act, signed into law in early
October.

"1) Aggregate demand falls sharply below aggregate supply, price
deflation sets in.
There is already massive price deflation in the U.S. in the sectors --
housing, autos/motor
vehicles and consumer durables -- where the inventory of unsold
goods is huge. The fall
in prices and the excess inventory forces firms to cut back
production and employment;
the ensuing fall in incomes leads to further fall in demand --
and induces another vicious
cycle of falling prices and falling production/employment/income
and demand.

"2) When there is deflation, there is no incentive to
consume/spend today as prices will
be lower tomorrow. Buying goods today is like catching a falling
knife and there is an
incentive to postpone spending until the future: Why buy a home
or a car today if its price
will fall another 15% and purchasing today would imply having
one's equity in a home or a
car wiped out in a matter of months? Better to postpone spending.
But this postponing of
spending exacerbates the vicious cycle of falling demand and
supply/employment/income
and prices."

Assume I am a lender
Zero Inflation ... I loan 100,000 to X at 5% for 5 years. I get 100,000 +
25,000. or 125,000 back.
5% inflation .... I loan 100,000 to X at 5% for 5 years. I get back 100,000
+25,000 that has
the buying power of $100,000
-5% inflation .... I loan 100,000 to X at 5% for 5 years. I get back $125,000 +
25,000 +25,000
new buying power because of deflation.

People will not borrow money so much in a deflationary period, because they will have
pay back in dollars worth more than when
they initially borrowed them. Banks want deflation.
Only when there is ample deflation, will
they again be happy to make more loans, provided
the borrower has the capacity to pay back
the loan. "Debt deflation sharply increases the risk
that borrowers will be forced to default
on real obligations that they cannot service. Thus, debt
deflation is associated with a sharp rise
in corporate and household defaults that create a spiral of
deflation, debt deflation and defaults.

"Central banks that used to be the "lenders of last resort" have
become the "lenders of first and
only resort," as banks don't
lend to each other, banks don't lend to non-bank financial institutions
and financial institutions don't
lend to the corporate and household sectors."

"Banks
and other financial institutions are still not lending to each other in spite of lower
spreads
as they need the liquidity
received by the Fed and they worry about the solvency of their counterparties;
only banks and major broker
dealers have access to these facilities and thus most of the shadow
banking system does not have
access to this Fed liquidity